Protected Rights (PR) and Ordinary Pension Benefit (OPB) plans can both be used to purchase commercial property. The value of both plans can be used when calculating the maximum borrowing limits.

Upon completion of a property purchase, internally we will hold the property on behalf of the relevant plans, in accordance with the cash each plan has invested and the borrowing allocated to it. Going forward, the rental income received and any costs and expenses incurred in relation to the property will be paid to/by the plans in accordance with their respective share of ownership. Provided we comply with the SIPP borrowing rules we will allocate the borrowing between the plans in accordance with our investor’s instructions.

In these cases it is important to consider the following:

• When deciding how much cash to invest in a property purchase from a protected rights plan please bear in mind ongoing SIPP fees, as well as any costs that may be payable by Suffolk Life as owner of the property (e.g. business rates in the event the property becomes unoccupied). The PR plan will be responsible for a share of these costs to accord with the share of the property held for it.
  This is particularly important where there is a loan. In the event any tenant defaults with its rent payments or a lease comes to an end, the loan repayments will continue to be payable by both the OPB and PR plans in the agreed proportions.
• Unlike OPB plans we cannot accept contributions in to PR plans. Therefore, in the absence of any income generated by the asset held on behalf of the PR plan (e.g. rent), subject to the below paragraph, the only way an investor can increase the value of his protected rights plan is to transfer protected rights monies in from another provider.
  
• If the protected rights plan does not have sufficient funds to pay its share of loan repayments or fees/expenses for which it is liable, then the investor can use his OPB plan to purchase an additional share in the property from the PR plan. This will result in the PR plan receiving cash to meet its ongoing share of the borrowing and fees etc. However, please note there is significant accounting work involved on the part of Suffolk Life in dealing with sales of shares of property between plans. We will charge a time based fee when dealing with such transactions. In addition a current open market valuation of the property will be required.

In order to reduce the risk of the OPB plan having to purchase a share from the PR plan you may wish to consider the initial split of the property ownership and borrowing at the outset.  For example you may decide that the OPB plan should invest maximum cash and be allocated maximum borrowing, with the PR plan making up the balance.